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So says Axel Schultz at the end of a provocative blog on Customer Think called When the Social Media Bubble Burst. I think he’s more right on his ending line than he is on his title. Automation does have a way of gumming up the social works.

I wrote a week ago about a large-scale example of this in the mortgage banking industry. Let’s go micro now, and have a look at small-scale automation.

Let’s have a look at the nuts and bolts of creating ‘friends’ on YouTube. The more friends you get, the more people look at you, the higher your ratings go on YouTube.

So you’re looking for an automated way to get more views to your YouTube videos; but you don’t want to risk losing your YouTube account by using tools that could get you flagged or banned. So you lead a lot of subscribers, and actual views, ratings and comments from other YouTubers so your videos get traffic. But you don’t have the time or the money to spend marketing them.

So you run Tube Toolbox, and you collect a few thousand users in just a few minutes who have watched and commented on videos similar to yours. You know that they’re the best friends and subscribers to have, because they watch videos in your niche, and leave comments on them.

So now that you have your list of targeted YouTube users, you start sending automated friend request and auto-subscribe to their channels. This software runs in the background, which means you’re free to do other work while Tube ToolBox is hard at work. You can even let it run overnight, and pick up friends and subscribers while you sleep.

Then when you come out with your next video, you just send your video to all your friends with a friendly message letting them know about your new video, asking them to rate and comment on it.

As comments on videos increase, you will start to notice your videos making it to he the most discussed, most viewed and top-rated sections in addition to others where the bulk of YouTubers watch videos.

Now your videos will get thousands of views with people subscribing to your channel, and adding you as a friend on auto-pilot. As you build momentum, your reach increases, and your videos have their best shot at going viral.

Before you know it, you’ll add thousands of friends, subscribers and views to your YouTube videos.

TubeToolbox is hardly unique. Nor are they doing anything wrong or illegal. But what they are doing is yet another version of “sand in the social gearbox.”

Take the germ of a social idea: a video, together with a way for people to “like” it and pass on their likes to others. Now automate it. Va-voom. Instant increases in friends, followers, statistics, etc.

As long as there remains a glimmer of personal connection, the automation of a function, driven to the limits of scale, will drive it further down the road of impersonality.

This is the story of spam. It is the story of customer ‘loyalty,’ as an emotional feeling got re-born as a statistical movement. It is what happened in the mortgage business, as mentioned previously.

It isn’t automation per se that is the villain. It is the substitution of process for interaction; the substitution of transactions for relationships.

Much of our time is spent designing businesses that are by bots, of bots and for bots. If management equals measurement—the dominant managerial philosophy of the day—then all we need are sensors and calculators. We can manage in our sleep.

And when we can create ‘friends’ in our sleep, on auto-pilot, we are nearly there. He who gains the most friends wins, so everyone tries to gain more friends. The usual end is either a monopoly or scorched earth. Certainly there aren’t many friends left.

Unlike Axel Schultz, I think we’ll evolve an answer. It will have to look like opting out of the mechanical arms race, because Schultz is right about the sand and the gearbox.

On July 22, the Gallup organization released their 2010 poll on US Confidence in Institutions. As Gallup headlined it, Congress scored an all time low (for all 16 institutions ranked, not just for Congress).

Barely beating Congress for lowest confidence ratings were, in order, HMOs (15th out of 16), Big Business (14th), organized labor (13th), and television news (12th). The Presidency, which also shows declines, still ranks 7th out of 16.

So it was fitting that CNBC (that would be in the 12th out of 16 group) put together a three part special panel discussion on “Restoring Trust in Business” (that would be in the 14th out of 16 group). The panelists included Gordon Bethune, Bill George and Myrtle Potter (representing the 14th out of 16 group), and Christie Todd Whitman (there wasn’t a category for ex-State Governors and Bush cabinet secretaries, but I’d hazard a wild guess she generally fit in).

Interestingly, there was consensus on the panel about how to restore trust in business.

Answer: It’s the government’s fault.

How Good Shows Go Bad

Given Charlie’s blogpost of yesterday about the hazards of relying on those-who-summarize (including me), here are links directly to the show so you can make up your own mind.

The four leaders invited have some fine credentials. Bethune was a revered CEO in the airline industry, where it’s very hard to be revered by anyone. George was a successful CEO, and writes on leadership. Potter was a COO at Genentech, and Whitman ran the State of NJ and the EPA. Good choices to opine about how business can regain confidence.

Give CNBC credit. Not only did they tee it up right, but nearly half the questions they asked more or less rhymed with, “how has business lost confidence?” or “how can business and the markets regain confidence,” or “what must be done for Americans to regain confidence in business?”

We would expect that the first thing we’d hear from any one of these leaders on the subject of restoring confidence in their institutions would be a straightforward acknowledgment of what was lost, and a statement of responsibility for having lost it. Is that not unreasonable to expect of distinguished leaders?

And indeed, every leader did get off at least one direct acknowledgment that business might have to improve itself—but having done the curtsey toward the question, the bulk of their comments were reserved for tax policy, government regulatory foibles, and flawed federal government policy.

Q. If you look at the data Hartman reviewed before for us, the congressional approval rating is low. Yet contrast that with the issues that got accomplished this year; various reforms—what is it that isn’t connecting here?

Whitman: You’ve seen a move in government away from policy to politics; everything’s partisan now. (She then proceeds to attack Nancy Pelosi).

Q. What do you think needs to be done to restore trust in business?

Potter: Business needs to take responsibility for stewardship and its own governance. We can think of examples where that didn’t happen. We also have to think carefully about how we’re paying so we can drive innovation. Innovation used to drive the world from the US, but not now.

Q. I’m interested in your view, Mr. George; you say the crisis wasn’t caused by subprime or derivatives. Wasn’t it caused by flawed leadership putting its own interests before its clients or its people?

George: No question about that; we saw flawed leadership in Enron and all the companies that blew up back in 2003, we saw it on Wall Street. Most of those leaders and their companies have gone away. But it is about leadership in government. We need to emphasize policy not bickering; we need a jobs policy. I’d like to see the President step up to a rebuild America program.

Q. In terms of business’s relationships to government, why doesn’t it seem to be working?

Potter: Well everyone’s feeling the crunch, but what stands out is jobs. Jobs are so critical to America feeling more confident about the country, and yet this chasm has to be closed between government and business.

Q. What is your best advice to the administration on what can be done to restore trust and confidence in business and in Wall Street?

Whitman: Clearly we need a rigorous regulatory policy, but we need to stop this gotcha attitude of blame-throwing in congress. The BP disaster turned into a criminal investigations instead of focusing on how to fix things. Clearly there was a problem on the regulatory side as well. We need to show respect for each other.

Bethune: You have to demonstrate some performance, not talk. No one in our government ever ran a business. The administration shouldn’t have focused on health care or regulatory reform, but on jobs…business doesn’t like uncertainty.

Q. Most people don’t expect as good a world for their kids as they had.

Whitman: The main thing is we’ve got to do is get deficit spending under control.

Q. One reason people don’t have trust in business is that, at the height of the crisis, big financial companies took big bonuses and were bailed out: what’s your take on that, Mr. George?

George: Goldman didn’t pay any bonuses last year. Trust is the fuel that enables society to run….but we need policies from government that create incentives. Goldman, JPMorganChase and are rethinking compensation to have pay for performance….investing in America….lower capital gains tax. But that won’t solve this jobs crisis. We’ve got to get back to investing in America.

Q. What is your one piece of advice that would reassure people that the future is going to be better for them?

Bethune: Tax policy; articulate it, make it pro growth, pro business, put cash to work, make the future clear in order to get confidence.

You be the judge, but let us suggest a simple headline.

When the institution that ranks 14th out of 16 shows up to talk about restoring confidence in their institution—given a decades-long decline—we ought to expect something more than a short-term political bashing of the 7th– and 16th-ranked institutions, a la the Sunday morning interview shows.

Business, heal thyself.

(At this point, you might be thinking, "Oh yeah? Think you guys could do better?"

Every 2 out of 3 months we publish an issue of the Trust Primer, an ebook series highlighting three recent provocative and insightful topics and conversations from the TrustMatters blog.

Catch up on posts you missed. See what we think is worth highlighting, and agree or disagree with us. Pass it along to friends you think might enjoy it. It is free, after all, and it looks pretty cool, if I do say so myself.

In this issue we touch on three different aspects of relationships: the relationship of a company to society, the relationship of a company to its several stakeholders, and the relationships between ourselves as individuals. The individual posts are:

Ideas lead technology. Technology leads organizations. Organizations lead institutions. Then ideology brings up the rear, lagging all the rest—that’s when things really get set in concrete.

Doubtful? Think the Catholic church.

Or, think the history of capitalism. The Industrial Revolution, depending on who’s counting, ran roughly the 19th century. As sweepingly mapped in Alfred Chandler’s classic The Visible Hand, the development of management followed the development of industry.

In his view, by 1920 the major lines were laid down. From 1920 to 1960, the theory of management basically just caught up to reality.

From the 1960s to basically today, it hasn’t changed a whole lot more, except for new approaches to strategy and process engineering. Most approaches to ‘strategy’ just quantified and clarified pre-existing notions of corporations competing for dominance against each other. The advances were incremental, in the application of sharper theories, models, metrics and data-crunching.

Today, just like in 1920, the reigning ideology of business is competitive, linear, behavioral, measurable, and quantifiable. Set financial goals. Define organizations, processes and procedures in cognitive terms. Convert all resources to financially fungible terms. Define finer and finer levels of behavioral objectives. Put financial incentives in place. Install sensors to micro-measure results. Step back and watch the machine run, tweaking the cheese rations as necessary.

What this view of business is NOT is everything that’s happening at the front of the chain—the technology-to-organization reality that drives all else.

It does not recognize cross-corporate borders, fluidity, collaboration, transparency, humanism in any serious sense, community, ethics, politics and the economics of the commons. All of which are critical business issues today.

We are stuck with a belief system rooted in the late 19th century.

Segue-way to a most interesting article by Gary Hamel in the February 2009 Harvard Business Review, titled Moon Shots for Management. Hamel, when at his best, is arguably the most creative business strategist extant; and here he is very, very good.

He reports out the results of a 2008 group brainstorming exercise aimed at nothing less than re-inventing management. From Management 1.0 to Management 2.0.

The article lists the Top Ten ideas from the group, including the following:

These are indeed Big Ideas, and it’s about time. Our old ideology is not only behind the times, not only holding us back, it is positively destroying value going forward.

We cannot afford another Sarbanes-Oxley bill to prevent the next Madoff. We cannot afford billions to simply re-capitalize Detroit. We cannot afford to teach people competitive dogma in a world that demands collaboration. And we cannot enforce ethics through processes and controls.

People like Hamel (and me, in this regard) are trying to reform ideologies. That is not easy, since the very terms of discussion are of and from the reigning ideology. How do you talk about things that people cannot conceptualize, given the tainted nature of the very language we use? (A simple example: how to free the word ‘strategy’ from the unconsciously inferred adjective ‘competitive’)?

Say "higher purpose" and "philosophical foundations" and you get glazed looks in most companies. That is not a meausre of its craziness, but a measure of the power of the reigning ideology. Copernicus sounded crazy too; but he wasn’t.

These ideas are directionally very right. I won’t say they have to come true. But I suspect Hamel would agree with me that if they don’t, we will not progress very far, if at all.

The book itself is organized according to “waves”—from self-trust, to relationship trust, then on to organizational, market and societal trust (at this last level, it echoes Francis Fukuyama’s seminal work, Trust, from a decade earlier, subtitled "the social virtues and the creation of prosperity.")

Covey’s section on self-trust—what I would call the realm of “personal trust”—centers around credibility, which he suggests consists of integrity, intent, capabilities and results. This covers territory similar to my own (with Maister and Galford) in The Trusted Advisor: (credibility + reliability + intimacy, all divided by self-orientation), except for his inclusion of integrity.

His linking of integrity and credibility remind me of another interesting piece of work—Integrity: a Positive Model…, by Michael Jensen and Werner Erhard. Both take an end-run around “ethics” toward a more practical approach which still yields similar results without the whiff of theology.

Most of the book, and I suspect most of his lectures and seminars, are aimed at corporate audiences—in particular, what people can do to become more trusted. He lists 13 behaviors, all of which make perfect commonsense (which is not to say they are common): listen first, talk straight, meet commitments, etc.

It goes without saying—though I’ll say it—I couldn’t agree more with him.

I think Covey’s greatest contribution, however, may lie in his forcefully advancing the simple proposition that Trust Matters. In one of his emails promoting a webinar, he rhetorically asks, “Is Trust more important than Vision? Strategy? Systems? Structure? Skills?” and proceeds to answer in the affirmative.

Linked with some effective framing (don’t pay a trust tax, earn a trust dividend), he makes a case that business hasn’t heard often enough: trust pays off, not just in some mufty-flufty New Age calculus (though that’s true too), but as well in the conventional, traditional business language of ROI, efficiency and effectiveness.

I have some minor quibbles—his emphasis on measurement, for example—but they are not critical to his contribution. It’s a fine piece of work that moves forward our understanding and appreciation of the critical role of trust, particularly in business.

Every month the Carnival of Trust highlights ten of the best posts on trust, whether business related or not. The next carnival will be Monday December third. If you’ve written a post you think would be a good fit, or if you have read a post by someone else that you think would be great for the carnival I’d like to encourage you to submit it for the carnival. This month’s host is John Crickett of Business Opportunities and Ideas.

Carnival Submission Guidelines:

The Deadline for submissions is midnight, Thursday November 29th.

Posts do not have to be business related. Trust in personal relationships, politics, or any other sphere of life are more than welcome, and, indeed, encouraged.

Welcome to the Sixth Carnival of Trust. As always, we’ve tried to make this Carnival a little bit special, a little bit more value-adding than the average carnival.

Specifically:

There are always only ten selections in the Carnival of Trust. They all earned it. They’re good. Or, at least provocative.

We’ve added our own perspective to it—this is not a dry list. In some cases, we even take issue with the post—and say why. You may not agree—but at least we offer a point of view.

In each Carnival of Trust, a theme emerges; in this one, it’s policy on trust. Issues of policy and trust in health care, in direct marketing, in marketing, in leadership.

Our aim is to make this interesting, educational and profitable. Let us know how it was for you.

With no further ado, let us move to this month’s winning posts.

Dr. Bleuel has written a gem of a piece about trust and loyalty. I agree with nearly every word he says—a rare thing. Samples: “Trust is built, one transaction at a time,” “loyalty and trust are not passive states,” and “once I trusted the Audi mechanic, the buying process for service is simple: take the car in and describe the problem.” The good doctor from Pepperdine gets it.

Kaila Colbin noticed a pattern among heavy-hitter reviewers of search engines—they implicitly rated trust, transparency and honesty higher than the non-collection of data. “If trust is more important than privacy, then a company that says up front, ‘We collect all of your search history and use it to target you directly,’ will do better than a company that says, ‘We will not use your search history for anything other than making our algorithm better, and oh by the way those ads today that match your search query from two weeks ago?’ Implication? “one of the single most critical factors for web businesses over the next few years will be the ability to engender trust.”

I am skeptical. I doubt that you’ll ever be able to show much in the way of financial return on something as subjective as "integrity."

A pox on Upshaw, and a raspberry to Whiteside for getting caught up the whirlpool of absurdity that marketing folk sometimes construct.

Hello—If you make increased quarterly margins the measure of integrity, you just lost all integrity. I don’t know how to say it any simpler than that. So read Whiteside’s piece—which does after all do a good job of laying out the trust in marketing issue—and see if you can figure out how to get the message through. To Whiteside’s additional credit, he also suggests integrity might be an end in itself. All is not lost.

…it is imperative for us to market ethically — otherwise, we lose the trust of our current and potential customers. …We strongly believe in creating trust through direct marketing — and that by doing this, you build more profitable customer relationships.

Precisely. Interestingly, she agrees with NY State Attorney General Cuomo, who expanded his student loan investigations to include direct marketing.

But—hold on to your seats—the Direct Marketing Association also agrees with Cuomo.

The Direct Marketing Association (DMA) came out quickly in support of this investigation saying that "illegal marketing activities erode trust for the entire industry." In fact, Jerry Cerasale, SVP of government affairs for the DMA, went further: "If these actions violate the law, then they should be stopped. Legitimate marketers need to have trust in the marketplace, and violating the law undercuts that trust. This is not retail, where you can walk in and touch a product and buy it. With direct marketing, you don’t hold the product until after you’ve bought it, so trust is essential.”

I’m going to have more to say about trust and the role of industry associations. Meanwhile, kudos to Arter, and to the DMA.

I think this is a very cool idea. It speaks to the truth about medical decision-making, which is that bedside manner matters enormously compared to technical ratings; and it offers transparency.

Niko Carvounis, on the other hand, thinks it’s a terrible idea, and does a thorough job of making the case. It’s an important issue, and deserves the thoughtful approach Carvounis brings it. It’s a great way to access some fundamental ideas about the upcoming healthcare debate.

Mahar answers all. Except maybe right or wrong; Herzlinger would argue the consumer is a lot smarter than Mahar et al say. Hey, you decide—this piece will help you. (Full disclosure: Herzlinger was a professor of mine, and I’ve written about her previously in Trust, Politics and US Health Care Policy .)

Thank you to these talented authors for providing great insights into issues of policy and trust the sixth Carnival of Trust. I hope you’ll enjoy these articles as much as I have. If so, please leave a comment for the authors on their sites or recommend these articles to others who will appreciate them.

My aim is is to make the Carnival of Trust interesting, educational and profitable. I always appreciate your feedback; let me know what you think in the comments.

For more discussions of the nature of trust, you can check out the Carnival’s previous editions:

Ward’s Automotive was for decades a major US auto industry trade publication. Each year, Ward’s published a yearbook, with a one-page market share table near the center.

Each year the book detailed share stats for not just GM, but Chevrolet, and within Chevy, Impalas and BelAirs. Plymouths, Dodges, Ramblers—all got detailed at the model level.

Except for one line.

Imports.

From the late 50s until the late 80s, the industry lumped together Rolls Royces and Volkswagens and Toyotas in one simple category. Imports.

Not until the late 80s—when “imports” finally exceeded 25% of the US market—did they get broken out. Last week, BusinessWeek reported that GM’s US market share was at 22.6% A reversal of fortune (in 1963, GM had 51% of the US market).

Over the years, Detroit came up with dozens of excuses. They blamed “deathtrap” used cars (whose only real threat, of course, was to prices of new cars). Roger Smith blamed technology. Detroit blamed fashion quirks in California. It blamed excise taxes. It blamed Japan, Inc.

As recently as May 8, 2005 (on George Stephanopoulos’ ABC News show), none other than Jack Welch blamed labor—high health care costs, “negotiated at a time of no competition”—and argued for a break. Welch conveniently forgets who negotiated all those contracts—Detroit. Without a gun to its head.

The truth is, Detroit had—and still has—an American disease. It has a few key symptoms:

• Belief that we are the biggest, standalone market—immune from global competition—and that the Big 3 had dominant market share

• Belief that GNP growth drives auto sales, that growth means growth in market share, and that buyers are price-driven

• Belief that, in the immortal words of Lee Iacocca, brought back a few years ago from the taxidermist to re-appear on TV, “the most important thing is—the deal!”

The Japanese in particular always believed it was a global market, far bigger than the US, and that they—including Toyota—were small players on a global stage. For them it was always about growth, not share. And for them, price was not something you jacked up with leader models and white-walls and radios—it was something you set low, for growth, and built in all the quality you could, until you earned the right to sell at higher price points. It was not "the deal"—it was, profoundly, the relationship.

They were—oh, what’s the word?—right.

So, perhaps we should go outside Detroit? Maybe tap the American zeitgeist and come up with—private equity, and an industry outsider!

True, Detroit is easy to pick on. But you’d think the rest of US industry would catch a clue.

On Wall Street, a new phrase was invented only a few years ago—IBGYBG. I’ll be gone, you’ll be gone—so let’s do the deal and let the suckers pay for it.

Now consumers are suckered into no-income second mortgages (“hey they wouldn’t lend me the money if they didn’t think I could pay it back, right?”) which are then sliced and diced and tranched and resold and leveraged and omigosh, looks like a credit crisis! The spirit of Iacocca lives.

In Bentonville, they learned the volume lesson, but not the price/quality lesson. WalMart is teaching a nation that anything worth having is worth having at half the price and one third the quality so you can get more things worth having—to replace yesterday’s list. Planned obsolescence lives.

In Washington, the courage to face long-term financial issues is in short supply, and the belief that we stand alone—politically, militarily, culturally—is the reverse.

We’ve ended up with: here-now, cheaper by the dozen, do the transaction, no money down, quarterly earnings—and get your buyout package just before you default on the schnooks’ pension plans.

Unusual for a business magazine—perhaps. But BW’s right—It’s time to strip politics and ideology from the discussion of a serious issue—the dissollution of trust in an increasingly divided society.

If you think the gap between the haves and the have-nots hasn’t increased massively, you may be as lonely as the anti-global warming people. The data are not on your side, and the public increasingly knows it.

From BW:

“It’s not only that the poor are paying more; the poor are paying a lot more,” says Sheila C. Blair, chairman of the FDIC, talking about auto and mortgage loans.

“Having access to credit should be helping low-income individuals. But instead fo becoming an opportunity for upward social and economic mobility, it becomes a debt trap for many trying to move up,” says Nouriel Roubini of NYU’s Stern School.

BW describes a growing range of companies selling high-priced products to the working poor. You can yourself look up stats about the growing income gap; the growing wealth gap; the increasing employment gap; the CEO to average worker gap; and the declining rates of upward social mobility that exist in this country.

There is, of course, no shortage of ideologues who want to invoke Milton Friedman and a strict constructionist view of Adam Smith.
Their arguments have the sound of 18th century English political theorists writing about natural law. Free markets are god’s blessing upon us—they work only when producers are free to produce what consumers freely choose. Anything else is an abridgment of freedom for producer and consumer alike. And so on.

We have heard this logic applied to tobacco, and watched people die. To fast food, and watched a national epidemic of morbid obseity among children. To CEO compensation, and seen vodka-peeing ice statues. To credit card and subprime mortgagers, and watched people sign themselves into servitude and bankruptcy. Then we made bankruptcy harder to get.

The gospel of capitalism has been hijacked by frenetic ideologues who never outgrew their adolescent delight with Nietzsche and Ayn Rand. It’s time to take it back. We need a new, healthy, spirited, mature version of capitalism, one that doesn’t enslave society’s weakest to overly reward shareholders.

Laissez faire is not natural law. It was given by lawmakers, who themselves crudely approximated the will of society. It is not guaranteed by anyone.

"Business doctrines have to change. Ideologies like shareholder value are being abused to rationalize and justify outrageous behavior. One of the tests for whether companies are aligning themselves with a broader social engagement is the extent to which the doctrine of shareholder value loses credibility.

"I don’t think it’s going to be openly repudiated, but I suspect that, gtadually, executives will stop making as much reference to it to justify their actions. It privileges one group, one constituency, over all the others, and it carries so much baggage now becaused it’s been so perverted and linked to short-term profits.

The social fabric depends on trust. Our ideologues don’t talk about that. We must take back the conversation.

One healthy sign: my 30th reunion at Harvard Business School last fall. The most heavily attended lecture was by Professor Bruce Scott, who spoke about the global trend toward concentration of wealth. We’re moving toward looking like Rio de Janeiro—armed gated communities surrounded by violent gangs.

Scott’s lecture got a standing ovation—both in his lecture room, and in the audio-connected overflow room, hastily put together to accommodate the crowd.

This from the old school crowd at HBS—the West Point of capitalism. There is hope.

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